GAP (NYSE:GAP) Posts Earnings Results, Beats Expectations By $0.04 EPS

GAP (NYSE:GAP) issued its quarterly earnings data on Thursday. The company reported $0.52 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $0.48 by $0.04, FiscalAI reports. GAP had a return on equity of 20.05% and a net margin of 8.14%.The company had revenue of $3.65 billion for the quarter, compared to the consensus estimate of $3.69 billion. During the same quarter last year, the business posted $0.57 earnings per share. The firm’s revenue was down 2.0% compared to the same quarter last year. GAP updated its FY 2026 guidance to 2.350-2.450 EPS.

Here are the key takeaways from GAP’s conference call:

• Revenue missed expectations in Q2, with net sales down 2% and comparable sales down 1%; the company narrowed its full-year net sales growth outlook to 1%–1.5%.
• Old Navy comparable sales declined 4% as women’s seasonal categories, pricing, and weaker marketing-driven traffic pressured results. Management expects sequential improvement in the second half and is using targeted assortment, pricing, and marketing changes to support a recovery.
• Gap remained the portfolio’s standout performer, with comparable sales up 10% for its 11th consecutive quarter of growth, supported by denim, fleece, kids and baby, stronger customer engagement, and market-share gains.
• Athleta continued to struggle, with comparable sales down 12%; management is prioritizing inventory discipline, more product newness, and improved storytelling, but expects trends to remain similar to the first half for the full year.
• Profitability and shareholder returns exceeded expectations, with adjusted gross margin up 20 basis points and full-year adjusted EPS guidance raised to $2.35–$2.45. Gap also repurchased $200 million of stock during the quarter, bringing year-to-date buybacks above $600 million, while raising its adjusted operating-margin outlook to 7.4%–7.6%.

GAP Trading Up 12.9%

Shares of GAP stock opened at $23.48 on Friday. The business has a 50-day moving average price of $20.06 and a two-hundred day moving average price of $22.87. GAP has a 12-month low of $18.11 and a 12-month high of $29.36. The company has a quick ratio of 1.08, a current ratio of 1.81 and a debt-to-equity ratio of 0.41. The firm has a market cap of $8.45 billion, a P/E ratio of 7.01, a price-to-earnings-growth ratio of 1.23 and a beta of 2.05.

GAP Dividend Announcement

The company also recently declared a quarterly dividend, which will be paid on Wednesday, October 28th. Shareholders of record on Wednesday, October 7th will be given a dividend of $0.175 per share. The ex-dividend date is Wednesday, October 7th. This represents a $0.70 dividend on an annualized basis and a yield of 3.0%. GAP’s dividend payout ratio (DPR) is presently 27.56%.

Hedge Funds Weigh In On GAP

A number of large investors have recently modified their holdings of the company. Danske Bank A S bought a new position in GAP during the third quarter valued at approximately $765,000. Public Employees Retirement System of Ohio raised its stake in shares of GAP by 0.6% during the third quarter. Public Employees Retirement System of Ohio now owns 71,867 shares of the company’s stock worth $1,537,000 after acquiring an additional 447 shares in the last quarter. Fiduciary Trust Co bought a new stake in shares of GAP in the 3rd quarter worth approximately $1,716,000. Entropy Technologies LP purchased a new stake in shares of GAP in the 3rd quarter valued at $1,532,000. Finally, Quantitative Investment Management LLC purchased a new stake in shares of GAP in the 3rd quarter valued at $766,000. 58.81% of the stock is owned by hedge funds and other institutional investors.

Wall Street Analyst Weigh In

Several analysts have weighed in on GAP shares. Barclays raised their price target on GAP from $20.00 to $23.00 and gave the company an “equal weight” rating in a report on Friday. Morgan Stanley boosted their price objective on GAP from $21.00 to $23.00 and gave the stock an “equal weight” rating in a report on Friday. Jefferies Financial Group cut shares of GAP from a “buy” rating to a “hold” rating and decreased their price objective for the stock from $29.00 to $23.00 in a research report on Wednesday, August 12th. JPMorgan Chase & Co. reaffirmed a “neutral” rating and issued a $27.00 target price (down from $35.00) on shares of GAP in a research note on Friday, May 29th. Finally, The Goldman Sachs Group dropped their target price on shares of GAP from $28.00 to $25.00 and set a “buy” rating for the company in a research report on Thursday, August 20th. Two research analysts have rated the stock with a Strong Buy rating, five have issued a Buy rating, ten have issued a Hold rating and one has assigned a Sell rating to the company’s stock. Based on data from MarketBeat, the stock has a consensus rating of “Hold” and a consensus target price of $27.21.

More GAP News

Here are the key news stories impacting GAP this week:

• Positive Sentiment: Quarterly earnings beat expectations: Adjusted EPS was $0.52, exceeding the $0.48 consensus estimate. Gross margin expanded 20 basis points to 41.4%, helping Gap outperform operating-profit expectations despite weaker sales. Gap names Michael Francis Old Navy CEO as quarterly profit beats estimates
• Positive Sentiment: Profit outlook raised: The company now expects fiscal 2026 EPS of $2.35 to $2.45, above the roughly $2.33 analyst consensus. Management cited continued momentum at the Gap brand, margin discipline and strength at Banana Republic. Gap lifts annual profit forecast on strength of namesake brand
• Positive Sentiment: Old Navy leadership reset: Michael Francis, a retail veteran with experience at Walmart and Target, will become Old Navy’s president and CEO on November 2, replacing Haio Barbeito. Investors appear hopeful that Francis can improve the company’s largest brand. Gap shares jump after Old Navy brings in new CEO to revive brand
• Positive Sentiment: Analyst support increased: TD Cowen and BTIG raised their price targets to $27 and assigned “buy” ratings. Bank of America also raised its target to $27, while Morgan Stanley lifted its target to $23 but retained an “equal weight” rating.
• Neutral Sentiment: Sales remained soft: Second-quarter revenue fell 2% year over year to $3.65 billion, below the $3.69 billion consensus, while comparable sales declined 1%. Full-year revenue guidance of about $15.6 billion is slightly below analyst expectations. Gap Inc. Reports Second Quarter Fiscal 2026 Results
• Negative Sentiment: Brand performance was uneven: Old Navy reported sluggish comparable sales, and Athleta continued to face pressure. The need for a leadership change underscores execution risks even as Gap and Banana Republic show stronger momentum.

GAP Company Profile

Gap Inc is a global specialty retailer renowned for its portfolio of apparel and accessories brands, including Gap, Banana Republic, Old Navy and Athleta. The company designs, sources and markets clothing across a broad price range and style spectrum, catering to men, women and children. Its offerings extend from everyday wardrobe essentials such as denim, tees and outerwear to performance and lifestyle pieces, reflecting each brand’s distinct identity and price point.

Founded in San Francisco in 1969 by Donald and Doris Fisher, Gap Inc has grown into one of the world’s largest apparel companies.